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Difficulty: EasyForeign Trade Types and Balance of Payments

In international trade accounting, which of the following items is classified as a visible export in the calculation of a country's Balance of Trade?

  1. A
    Freight charges earned by foreign shipping companies
  2. Crude oil shipped to international buyersAnswer
  3. C
    Banking fees received from overseas transactions
  4. D
    Revenue spent by foreign tourists in local hotels

Answer

Crude oil shipped to international buyers
Crude oil is a physical commodity that can be inspected, weighed, and recorded at port customs. As a tangible merchandise export, it is categorized as a visible item and included in calculating the Balance of Trade.

Step-by-Step Solution

1
Identify the defining characteristic of Balance of Trade items
Balance of Trade accounts exclusively for visible trade, which consists of physical, tangible goods that pass through customs ports.
Visible items can be physically seen, touched, and measured.
2
Categorize each option as visible (tangible goods) or invisible (services)
Crude oil is a tangible physical product, whereas freight transport, banking fees, and tourism are services.
Services do not have physical form and are therefore recorded as invisible trade in the Balance of Payments.

Key Concept

Visible Trade vs. Invisible Trade
Estimated Time:45s
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Topics

Foreign Trade Types and Balance of Payments

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